DataRover will focus on both hardware and software for mobile workers in
markets such as utilities, health care, and transportation--essentially
General Magic's original business.

General Magic will retain a 49 percent interest in
DataRover and contribute $3.4 million in cash plus technology, the company
said. DataRover employees also invested in the new venture. Fewer than 50
employees moved to DataRover, leaving 130 at General Magic, which delayed
its earnings report, originally scheduled this week, until November 11.

"It's a natural thing for the company to do," said Lewis Alton managing
partner at San Francisco investment firm L.H. Alton. "The real play in this
company is Portico. It seems there's a real place in the marketplace for it."

The Portico service, code-named Serengeti during more than two years of
development, provides a universal mailbox where a mobile worker can call a
single number to have voice mail, email messages, and faxes read aloud by
an automated system. Users also can get their address books and calendars
through the same service.

"I'm interested to see what comes out of the spin-out," said Chris Shipley,
editor of industry newsletter DemoLetter, who
described General Magic as "still on the comeback trail."

"Some of the technology got shelved from the old days. If they can breathe
some life back into what they had, it could be really exciting," Shipley
added.

Steven Schramm, now DataRover chief executive after running the division
inside General Magic for four years, said the spin-off was made because
there was little synergy between the two businesses.

"They're going after horizontal markets; we're going vertical," said
Schramm, adding that the company's positioning as a single unit was
difficult to explain. "We decided that my business was self-contained--no
conflict, no confusion."

DataRover will combine its customizable handheld computer DataRover 840,
powered by the Magic Cap 3.1 operating system, software applications, and
development tools. The device can capture and store data remotely, then
transfer it to databases such as Oracle and Sybase.

"We are absolutely 100 percent focused on vertical markets, and we don't
want to spread ourselves too thin," Schramm added, estimating the market at
$500 million to $1 billion a year and growing rapidly.

Priced at $1,095 for a single unit, with volume discounts, DataRover
competes with laptop or notebook computers at the high end, other makers of
dedicated devices like Fujitsu, and
with consumer-oriented Windows CE devices and PalmPilots.

In its vertical strategy, DataRover is going after some of the same markets
Apple Computer pursued with its Newton
device before abandoning the
handheld in February 1998.

General Magic got a notable boost in March when Microsoft licensed some technology and
invested $6 million in the company. In June, General Magic raised another
$35 million privately.

Portico, officially launched July 30, is currently being marketed by
30-plus resellers around the country and is being tested by a number of
large telephone carriers, who are key part of General Magic's distribution
strategy. They include Bell Atlantic Mobile,
BellSouth Cellular Corp., Cellular One, and AT&T.

General Magic is currently advertising Portico, which it calls a "virtual
assistant," in national print publications as well as radio ads.